Middle East banks see mixed results all around (By IFN)

Middle East banks see mixed results all around

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GLOBAL: As fourth quarter results from 2012 start rolling in, some Middle East Islamic banking stalwarts have posted declines in net profits, in some unexpected markets which have been making progress in the Islamic banking space over the last year such as Qatar and Saudi Arabia. Qatar Islamic Bank saw its Q4 net profits ending the 31st December drop by a massive 57% to QAR109 million (US$29.93 million) mainly attributed to higher loan provisions and investments. In April last year, Standard & Poor’s (S&P) rated the bank ‘bbb’ based on its “adequate business position, strong capital and earnings, weak risk position, average funding and adequate liquidity”. The bank’s long-term ratings however, was given a boost based on the high likelihood of extraordinary government support if needed. S&P’s ratings provision was also based on “the bank’s leading position in the fast-growing Qatari Islamic banking segment, its simple and predictable business model and adequate management”. S&P had also noted that the bank’s geographic and business diversification was limited and needs a more aggressive growth strategy. Qatar International Islamic Bank however saw its total assets grow by 22.3%, with an 18.6% increase in customer deposits and a leap in financing assets by 28.6%. The bank’s net profits also grew by 4% to QAR679 million (US$186.47 million) compared to Q4 2011. The bank’s managing director, Sheikh Dr Khalid bin Thani said in a statement that the bank intends to grow its foothold in the country via SME financing and a slew of significant new projects in the pipeline. In Saudi Arabia, Samba Financial Group had also seen its net profit decrease by a small margin to SAR869 million (US$231.69 million), while Al Rajhi Bank, the kingdom’s largest Islamic bank by assets had posted a marginal increase in net profits by 7% in the fourth quarter ended the 31st December 2012. This was after the bank had posted a 3.5% dip in net profits in the third quarter ended September 2012; missing analysts’ forecasts. Islamic Banks in the emerging markets of Egypt and Oman however have reported encouraging results, with Al Baraka Bank of Egypt posting a 36% gain in net profits to EGP135 million (US$20.34 million) for the three months ended December 2012, driven mainly by an increase in net financing income and a decrease in booked provisions. According to analysts at Beltone Financial, the bank’s balance sheet saw a 16% advance in year on year gross Islamic financing. Oman’s Bank Muscat’s net profits grew by 18.5% to OMR139.2 million (US$360.51 million) on the 31st December 2012 from the previous year. Analysts have forecasted total Islamic banking assets to reach OMR1.5 billion (US$3.89 billion) by the end of this year.